America’s disappearing IPOs

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What happened to all the IPOs?

It wasn’t so long ago that the market for initial public offerings — in which a promising and often young private company first allows public investors to buy its stock, often as a way to raise money and invest in the future — was booming. In the two decades before 2000, America was averaging some 300 IPOs a year. In fact, volume was considerably higher than that from 1990 to 2000, reaching 706 in 1996, for example.

Then they fell off a cliff. Last year, there were a mere 147. What happened?

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Only 3% of Americans are legally allowed to invest in startups

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All of the venture capitalists that are worth more than $1 billion are all men. Most of these men have invested in Groupon, LinkedIn, Skype, YouTube, Paypal, Facebook and others. Chances are, you are legally barred from joining their exclusive investors’ club.

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AngelList: A disruptor that is upending angel investing

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Naval Ravikant at the AngelList office.

Recently, Naval Ravikant, a wildly successful angel investor—Uber, Twitter, etc.—and serial entrepreneur met with a group of institutional money managers to pitch them his latest venture. He didn’t ask them to invest in it, but he asked them to invest through it. If enough of the money managers take him up on the offer, it could usher in an era of radical disruption in the world of angel investing.

 

 

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All of the biggest and oldest tech companies will be forced to break up: Marc Andreessen

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Marc Andreessen

eBay, Hewlett-Packard and Symantec are three huge companies that have decided to split apart.  Super investor Marc Andreessen was involved in two of these companies and predicts that this is only the beginning. He sits on the boards of eBay and HP.

 

 

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Why managing cashflow is critical for the survival of your startup

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Managing cashflow and burn rate is more critical to your business success than having the right idea and the right product.

A basic survival metric for every startup is cashflow. Investors check your burn rate to assess your efficiency, and project your remaining runway before you run out of money and into a brick wall. Don’t wait until you are almost out of cash before managing every dollar spent, or looking for the next refueling from investors. Desperate entrepreneurs lose their leverage and die young.

 

 

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Pre-VC rounds are shaking up early-stage funding

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The Sense sleep tracking device has been backed by angel investors and crowdfunding campaigns.

Wall Street Journal’s Evelyn Rusli reports that startups are tapping new sources of early-stage funding, including ad hoc networks of wealthy tech executives doing some investing on the side, and that should give some big venture capital firms pause. Twenty-three year old entrepreneur James Proud is the latest example. He has raised $10.5 million from a circle of well-connected angel investors and an additional $2.4 million in a Kickstarter campaign for his sleep-tracker device Hello.

 

 

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The problem with profitless-on-purpose startups

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SpoonRocket

There are dozens of services operating in and around San Francisco like – Homejoy for cleaning, BloomThat for flowers, Postmates for courier service, SpoonRocket a gourmet meal-delivery service, and on and on. Most of them provide cheap, convenient amenities at the tap of a smartphone app. Few of them are profitable on a corporate level. And together, they’ve formed the backbone of a strange urban economy: one in which massive venture-capital injections allow money-losing start-ups to flourish, while providing services that no traditional, unsubsidized business can match. It’s an economy built on patience, and the hope that someday, after the land grab is over and the dust has settled, a better business model will emerge.

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